The income tax (I-T) department has enabled the online ITR-1, ITR-2 and ITR-4 forms with pre-filled data for the assessment year 2023-24. With this, eligible taxpayers can file income tax return (ITR) for financial year 2022-23 (assessment year 2023-24). The deadline for the same is July 31, 2023. While filing ITR has several benefits, making mistakes in it can result in several complications.
Here are the most common mistakes taxpayers should avoid while filing ITR:
Choosing wrong ITR form
There are
different forms prescribed for different types of taxpayers. For example, ITR-1 is applicable only for resident individuals having income up to Rs 50 lakh and only for those having income from salary, one house property and other sources. Similarly, there is ITR-3 which is applicable for income from business or profession and ITR-4 for the presumptive method of taxation such as for freelancers.
So, taxpayers should be careful while choosing the ITR form. A wrong form can render the tax return filed defective and the taxpayer may receive a notice to file the return once again.
Quoting wrong assessment year
While filing the returns, one must ensure to provide the correct assessment year. For FY 2022-23 the correct corresponding AY is 2023-24. Mentioning the wrong AY increases the chances of double taxation and attracts unnecessary penalties.
Non-verification of TDS details with Form 26AS
The form 26AS carries a summary of TDS and tax payments on the income such as salary, interest, or sale of immovable property. Before filing, one should verify the TDS and tax payments with form 26AS.
Non-declaration of all bank accounts
A taxpayer should declare all their bank accounts in India except dormant accounts. The taxpayer can choose the bank account in which they want to get their refund credited.
Filing ITR without using all sources of income
While computing the ITR, it is vital to take into account all sources of income whether from the previous or current employment or income from investments and file it under the appropriate ITR form. If any income (from previous job) is not reported, then a discrepancy is bound to reflect in the TDS certificate (Form 16) and Form 26AS. The tax department can send a tax demand notice asking taxpayer to pay additional tax dues, if any.
Non-declaration of income from capital gains on sale of assets
The ITR requires complete details of the sale of capital assets, purchase and expenses to calculate the capital gain. Also, in case the taxpayer makes investments to claim capital gains exemption, the details of the investment and capital gains exemption should be given.
No reporting of income from investments such as interest income
A taxpayer should report interest income from fixed deposits, savings account, post office saving schemes, bonds and other investments. The interest from savings accounts is also eligible for tax deduction up to Rs 10,000 for taxpayers who less than 60 years of age. In the case of senior citizens (60 years and above), the interest from fixed deposits, savings accounts and post office deposits is eligible for tax deduction up to Rs 50,000.
No clubbing of minor's income
In case the taxpayers have made any investments in the minor child’s name, they should include the income such as interest income as part of the income. The clubbing of income is generally with the parent whose income is higher. Taxpayers can can claim a deduction of up to Rs 1,500 per child up to two children.
Entering incorrect details
The ITR forms carry several rows and columns that need to be filled out at the time of filing one’s income tax returns. The details have to be entered in a particular format, which if not done properly can lead to errors.
Filing returns inaccurately in case of more than one Form 16
In case an employee has more than one Form 16, he/she should consolidate all the incomes and thereafter compute the tax liability according to the applicable slab rate.
